Finkelstein v. Fine

182 A.D. 521 | N.Y. App. Div. | 1918

Thomas, J.:

Two actions on promissory notes were consolidated. The notes were made by the defendant Louis Fine to the order of Joseph Berg & Co. The maker, Fine, set up the defense that the notes were delivered to the payee “ conditionally, and upon the agreement that they were not to be deemed in effect or delivered until the said merchandise and all of same was delivered to this defendant, and were given without any consideration whatsoever, other than for the delivery of said merchandise, and the said Berg and Lipkin agreed to hold said notes so delivered conditionally until said merchandise and all of same was actually delivered by them to this defendant.” Then follows an allegation that the payee did not deliver “ all of the merchandise above mentioned to this defendant, and have refused so to do, although duly demanded.” There is a counterclaim to which I will later call attention. After the opening the plaintiff moved to “ dismiss and strike from the record the so-called affirmative defense on the ground that it fails to constitute in law a defense to the cause of action herein alleged,” and the motion was granted and exception taken. As the counterclaim had been already dismissed, as it should have been, the defendant was defenseless. After such exclusion of the appellant from the issue, the plaintiff offered in evidence the notes and a verdict was thereupon directed. The respondent’s argument is that he was a holder of the notes and that as such holder he was, under section 98 of the Negotiable Instruments Law, “ deemed prima facie to be a holder in due course.” But the appellant in his answer denies “ knowledge or information sufficient to form a belief as to the truth of the allegations ” in the complaint that plaintiff was the owner and holder. It is true that the plaintiff produced the notes and offered them, in evidence, but that was not done until the defendant’s answer had been dismissed. ' Even if it could be inferred that the plaintiff was the holder, and, therefore, the prima facie holder in due course, the defendant could meet the presumption so accruing to the plaintiff, but as the answer was dismissed that became impossible. Moreover, it was defendant’s right, if he could show that the plaintiff was not the.holder in due course, to prove that the notes were delivered to the payee on a condition precedent that had not been performed, but he was deprived of such opportunity. The respondent correctly contends that under section 98 the burden was on the defendants to show that the title of the payee in the notes was defective, but, should the defendant sustain that burden, the plaintiff would be obliged to make more than a prima facie case that he had acquired the title as holder in due course. Under section 94 of the Negotiable Instruments Law, the title of the payee was defective if he negotiated the notes “ in breach of faith, or under such circumstances as amount to a fraud.” But it would be such breach of faith or fraud should the payee negotiate a note in violation of an agreement that he should not do so until he had made full performance on his part. It is clear that the defendant was deprived of his just opportunity. I .find no justification for it, provided the answer properly pleads a condition precedent, for which the appellant contends. The respondent contends that the answer pleads a condition subsequent. In my judgment it correctly pleads an unperformed condition precedent to the delivery of the notes.

The judgment of the County Court of Kings county should be reversed and a new trial ordered, costs to the appellant to abide the event.

Jenks, P. J., Mills, Rich and Putnam, JJ., concurred.

Judgment of the County Court of Kings county reversed and new trial ordered, costs to the appellant to abide the event.